Jacob Orvidas Faces Charges in Fraudulent Bitcoin Trading Scheme
The Commodity Futures Trading Commission (CFTC) has taken action against Jacob Orvidas, filing and settling charges related to a fraudulent Bitcoin trading scheme.
Fraudulent Solicitation and Deception
The CFTC’s order found that Orvidas fraudulently solicited at least four individuals to participate in a commodity pool, promising high profits from leveraged Bitcoin trading. However, Orvidas lost nearly all of the funds while trading and then deceived pool participants about the losses and the availability of their money. Furthermore, he failed to register as a commodity pool operator.
False Claims and Penalties
Orvidas falsely claimed that he had turned a $100,000 investment into $2.7 million. As part of the settlement, Orvidas has been ordered to pay restitution exceeding $2 million and a civil monetary penalty of $500,000. He is also mandated to cease any further violations of the Commodity Exchange Act. Additionally, the CFTC has imposed a 10-year ban on Orvidas, preventing him from registering or trading in commodity markets.
CFTC’s Focus on Investor Protection
The CFTC’s Director of Enforcement, Ian McGinley, emphasized the importance of protecting individuals and investors in digital-asset markets, stating, “Protecting ordinary people has always been at the heart of the CFTC’s digital-asset enforcement program.”
Deceptive Tactics and Losses
The case against Jacob Orvidas spans from approximately October 2017 through at least July 2020, during which he deceitfully persuaded at least four individuals to allow him to trade leveraged Bitcoin on their behalf through a commodity pool. Orvidas misrepresented his trading abilities and made false promises of substantial profits and asset protection.
These promises included claims that another client had turned a $100,000 investment into $2.7 million, which were all untrue. In response to these deceptive tactics, pool participants collectively contributed over $2 million to Orvidas’ commodity pool, only to see it lost in trading. To cover up these losses, Orvidas provided pool participants with fictitious spreadsheets claiming trading profits and high account balances while lying about his inability to distribute these profits or return the principal. As a result, the pool participants incurred losses exceeding $2 million.
Advice for Crypto Investors
CFTC Commissioner Christy Goldsmith Romero offered important advice to crypto investors in light of this case. She urged individuals to arm themselves against illegal activities by checking if investment professionals are legally registered. Legally registered brokers and advisors are mandated to have customer protections in place. Investors can use free tools to verify if an individual and their associated company are registered with the CFTC, National Futures Association (NFA), Financial Industry Regulatory Authority (FINRA), or the Securities and Exchange Commission (SEC).
Goldsmith Romero also cautioned against believing extravagant promises of high profits, advising investors to seek written proof of actual gains and inquire about any losses experienced. In case of suspected scams or delayed withdrawals, she encouraged victims to contact the CFTC and SEC to file a tip or complaint.
The Jacob Orvidas case serves as a cautionary tale of fraudulent practices in the crypto space, demonstrating the importance of due diligence and regulatory oversight to protect investors and maintain market integrity.